CPA REVIEW SCHOOL OF THE PHILIPPINES

Manila

ADVANCED FINANCIAL ACCOUNTING AND REPORTING

First Preboard Examination

SOLUTIONS

1. C
2. B

22 23 24
CP 75M 72.5 72.5
TEC (60) (80) (76)
EGP/Loss 15 (7.5) (3.5)
POC 30% 100% 100%
To date 4.5 (7.5) (3.5)
PY - 4.5 (7.5)
CY 4.5M (12) 4

2024

CGS 10.5
CinP 4M
Rev 14.5 (72.5M * 20%)

CinP ( 76 * 80% = 60.8 - 3.5 = 57.3M)

3. C
4. B

22 23
CP 14M 14M * 80% = 11.2M
TEC (21) (13.125)
EGP/Loss (7) 875,000
POC 100% 80%
To date (7) 700,000
PY - 7M
CY (7) 7.7

5. B
6. B
7. C
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22 23 24 25 26
CP 15M 15M
400k 500k
(375) (300)
15,025 15,025 15,200 15,200 15,200
TEC (17M) (15M) 15,500 (14M) (14.5)
EGP (300) 1,200 700
POC 15% 35% 50% 80% 100%
To date 960 700
PY (300) (960)
CY 1,260 (260)

15,025 * 20% = 3,005,000

CGS 3,300
CinP 1,260
Rev 4,560 (15,200 * 30%)
8. B

9. A

Access 700,000 640,000/5 * 3/12 = 32,000

Construction 875,000 800,000 * 30% = 240,000
Delivery 175,000 160,000 * 88/400 = 35,200
1,750 1,600 307,200

10. C
11. D
12. A

Sales 1,080,000 (180,000 * 6)

CGS (696,600) (108,000 * 10 = 1,080,000 + 72,000 + 9,000 =1,161,000 * 6/10)
GP 383,400
SE (90,000)
CE (162,000) (1,080,000 * 15%)
131,400

1,080,000 - 90,000 - 9,000 - 162,000 = 819,000

13. D

14. A
15. A
16. D

Access 100,000 75,000/5 15,000 60,000 unearned 12/31

Construction 400,000 300,000* 100% 300,000
Delivery 500,000 375,000*15/20 281,250 93,750 unearned 12/31
1,000 750 596,250 153,750
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17. C

18. D
19. A

(42,000 + 10,500 + 27,300 + 17,500 + .10x + 4,571,000 = x) 4,668,300/.90x

x = 5,187,000/ 66.50 = 78,000 units sold

Sales 5,187,000
CGS (2,770,950) (3,500,000 + 35,000 + 17,500 = 3,552,500 * 78/100)
GP 2,416,050
AE (42,000)
DE (10,500)
Ins (27,300)
CE (518,700)
1,817,550

Inventory 3,552,500 * 22/100 = 781,550

20. A
21. D
22. D
23. B
24. C

25. B

Direct labor cost J1 54,000

x 140%
OH applied J1 75,600

26. C

Direct materials J1 38,400

Direct labor J1 54,000
OH applied J1 75,600
Total Cost 168,000 (same as total cost of J2)
Direct labor J2 (60,000)
OH applied J2 (90,000) (60,000 x 150%)
Direct materials J2 18,000

27. B

Direct materials J3 68,040

Direct labor J3 44,400 (66,600 ÷ 150%)
Oh applied J3 66,600
Total cost 179,040
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Total cost of J1 168,000

Total cost of J3 179,040
EI WIP 347,040

28. D

Total budgeted OH 14,240,000

Total budgeted machine hrs ÷ 1,600,000
Predetermined rate 8.9

29. B

Machine hrs used J1 68,000

x 8.9
OH applied J1 605,200

30. D

Budgeted OH materials related 3,840,000

Budgeted cost of materials ÷ 12,800,000
Predetermined rate .30

Budgeted OH machine related 10,400,000

Budgeted cost of materials ÷ 1,600,000
Predetermined rate 6.50

Direct materials J3 312,000

Direct labor J3 144,000
OH applied J3 244,400 [(312,000 x .30) + (23,200 x 6.50)]
Total cost J3 700,400

31. C

Total cost of 40,500 units 12,960,000 (40,500 x 320)

Rework cost 108,000
NRV spoiled units (27,000)
Total cost of good units 13,041,000
Good units ÷ 40,050 (40,500 - 450)
Cost per good unit 325.62

32. A

Total cost of 40,500 units 12,960,000 (40,500 x 320)

Total cost of spoiled units (144,000) (450 x 320)
Total cost of good units 12,816,000
Good units ÷ 40,050 (40,500 - 450)
Cost per good unit 320
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33. C

Cost of materials purchased and in process 825,000

Cost per material ÷ 150
Total units in process 5,500
Total units completed (5,250)
Units not completed 250
Cost per material x 150
Cost of material in MIP, end 37,500

Total units completed 5,250

Total units sold (5,000)
Units not sold 250
Total cost per unit x 270
Total cost FG, end 67,500

34. C
35. D

36. C

Direct materials 600,000

Applied conversion cost 2,600,000
Cost of sales 3,200,000

37. C

NRV by-product [(1,200 x 5) – 3,500] 2,500

Allocation base: Alpha: (25,000 x 15) – 16,200 358,800 (65%)

Beta: (20,000 x 12) – (49,300 – 2,500) 193,200 (35%)
552,000

Share in joint cost (375,000 x 35%) 131,250

Separable cost (49,300 – 2,500) 46,800
CGM 178,050

38. D

CGM 178,050
Units produced ÷ 20,000
Cost per unit 8.9025

Sales (16,000 x 12) 192,000

COS (16,000 x 8.9025) (142,440)
Gross profit 49,560
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39. D

BI eup 22,500 (22,500 x 100%)

Started & Completed 52,800 (75,300 – 22,500)
EI eup 28,200 (28,200 x 100%)
WA eup as to DM 103,500

EUP alternative computation:

Completed units 75,300
EI eup 28,200 (28,200 x 100%)
WA eup as to DM 103,500

Total cost of DM 179,400 (76,500 + 102,900)

WA eup as to DM ÷ 103,500
Cost per eup DM 1.73

40. B

BI eup 5,625 (22,500 x 25%)

Started & Completed 52,800 (75,300 – 22,500)
EI eup 4,230 (28,200 x 15%)
FIFO eup as to CC 62,655

EUP alternative computation:

Completed units 75,300
EI eup 4,230 (28,200 x 15%)
BI eup (last year) (16,875) (22,500 x 75%)
FIFO eup as to CC 62,655

Total cost of CC 242,535

FIFO eup as to CC ÷ 62,655
Cost per eup CC 3.87

41. D
42. C
43. D

44. C

Cash 150,000
Excess of FMV of AR over AP (80,700 – 75,000) 5,700
Excess of FMV of AR over Loan (187,500 – 130,000) 57,500
FMV of Inventories 41,200
Total free assets 254,400
Salaries (85,000)
Liquidation expenses (11,300)
Taxes (5,600)
Net free assets 152,500
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Excess of mortgage payable (including interest)

over FMV of Bldg (400,000 – 432,280) 32,280
Remaining unsecured liabilities (45,700 of AP and 84,300 NP) 130,000
Total unsecured liabilities without priority 162,280

Net free assets 152,500

Total unsecured liabilities without priority ÷ 162,280
Est. Recovery % 93.97%

Remaining unsecured liabilities (45,700 of AP and 84,300 NP) 130,000

x 93.97%
Estimated payment to unsecured liabilities 122,161

45. C

FMV Bldg 400,000

Unsecured portion of mortgage (32,280 x 93.97%) 30,334
Estimated payment to partially secured creditors 430,344

46. C

47. B

Statement of Realization and Liquidation for the month of September:

DEBITS CREDITS
Assets to be realized: 41,250 Assets realized: 52,500
Increase in assets: 45,000 Assets not realized: 18,750
Liabilities liquidated: 45,000 Liabilities to be liquidated: 67,500
Liabilities not liquidated: 56,250 Increase in liabilities: 22,500
Supplementary charges: 58,500 Supplementary credits: 63,750
TOTAL: 246,000 TOTAL: 225,000
21,000 loss

Share capital, end 37,500

Retained earnings, end 15,000 (36,000 - 21,000)
Stockholders’s equity, end 52,500
Liabilities, end 56,250
Total assets, end 108,750
Non-cash assets, end (18,750)
Cash, end 90,000
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48. A

Charlie Juliet Mike Oscar

Cash Non-Cash Assets Liabilities (25%) (25%) (25%) (25%)
123,000 1,622,000 966,000 330,000 387,000 290,000 (228,000)
T/R 300,000 (542,000) (60,500) (60,500) (60,500) (60,500)
Inty 355,000 (342,000) 3,250 3,250 3,250 3,250
Equip (8,000) (2,000) (2,000) (2,000) (2,000)
740,000 (738,000) 500 500 500 500
T/P (7,000) 1,750 1,750 1,750 1,750
Int 1,000 (250) (250) (250) (250)
1,510,000 - 960,000 272,750 329,750 232,750 (285,250)
(960,000) (960,000)
(95,083) (95,083) (95,083) 285,250
(550,000) (177,667) (234,667) (137,667)
- - - - - - -

49. B

Charlie Juliet Mike Oscar

Cash Non-Cash Assets Liabilities (25%) (25%) (25%) (25%)
123,000 1,622,000 966,000 330,000 387,000 290,000 (228,000)
T/R 300,000 (542,000) (60,500) (60,500) (60,500) (60,500)
Inty 355,000 (342,000) 3,250 3,250 3,250 3,250
Equip (8,000) (2,000) (2,000) (2,000) (2,000)
740,000 (738,000) 500 500 500 500
T/P (7,000) 1,750 1,750 1,750 1,750
Int 1,000 (250) (250) (250) (250)
1,510,000 - 960,000 272,750 329,750 232,750 (285,250)
(960,000) (960,000)
285,250 285,250
(835,250) (272,750) (329,750) (232,750)
- - - - - - -

50. D

M 120,000 / 22% = 545,455

X 162,000 / 33% = 490,909
R 389,000 / 45% = 864,444

Priority amount 1st month distribution

R 143,545 143,545
M 12,000 12,000
R 24,546 24,546
M 8,000
X 12,000
R 16,364
 Page 9
51. C

YYZ YDY Total

Before distribution 732,000 865,000 1,597,000
MPL (111,000) (999,000) (1,110,000)
Absorption (134,000) 134,000 -
Cash distribution 487,000 - 487,000

NOTE: By process of elimination from the choices, using the ratio 1:9 to distribute the total
loss among the partners will result to only partner YYZ will receive cash at the end of the
liquidation and the share of YDY in the loss is greater than his interest therefore he will not
receive any cash at the end of the liquidation.

52. B

NOTE: Since it was explicitly stated that the branch already closed the net loss in his
books, it was implied that this was a home office error, therefore the home office did not
reflect yet the net loss in its investment in branch account.

53. D
54. C

55. A
56. C

Investment in Branch HOC

Unadjusted 603,000 303,000
a. In-transit merchandise at billed price 165,000
b. returned merchandise at billed price in-transit (20,000)
c. credit memo sent by home office not yet
(50,000)
recorded by branch
d. debit memo sent by the home office not yet
recorded by the branch and the home office did 48,000 48,000
not also record the said debit memo
e. error in recording the debit memo received
165,000
from the home office
Adjusted 631,000 631,000

57. A
58. D

59. B
Contributed Capital Agreed Capital Bonus
Harley 135,000.00 153,750.00 18,750.00
Oscar 75,000.00 153,750.00 78,750.00
Penny 125,000.00 153,750.00 28,750.00
Emman 280,000.00 153,750.00 (126,250.00)
Total 615,000.00 615,000.00 -
 Page 10
60. C

Harley Oscar Penny Emman Total

Interest Allowance 7,687.50 7,687.50 7,687.50 7,687.50 30,750.00
Salary Allowance - 20,000.00 - 20,000.00 40,000.00
Remainder 3:2:2:3 14,775.00 9,850.00 9,850.00 14,775.00 49,250.00
Share in Net Income 22,462.50 37,537.50 17,537.50 42,462.50 120,000.00

61. A

Harley Oscar Penny Emman

Beginning Balance 153,750.00 153,750.00 153,750.00 153,750.00
Share in Net Income 22,462.50 37,537.50 17,537.50 42,462.50
Withdrawals - (9,000.00) - (9,000.00)
Ending Balance 176,212.50 182,287.50 171,287.50 187,212.50

NOTE: Since the provision of their regular drawings was 15 days after end of the quarter,
on the last quarter salary, it cannot be withdrawn because the end of the year is on
December 31, 2023, thus 15 days after it will fall on the following year. Therefore only
9,000 can be withdrawn during 2023, [(5,000 x 3) x 60%].

62. C

63. C

Allany (30%) Alexa (50%) Anton (20%) Total

Interest 300 450 250 1,000
Salary - - 1,000 1,000
Remainder 6,900 11,500 4,600 23,000
Share in Net Income 7,200 11,950 5,850 25,000
Beginning balance 30,000 45,000 40,000 115,000
Adjusted Balance 37,200 56,950 45,850 140,000
Revaluation (1,455) (2,425) (970) (4,850)
Balance after Revaluation 35,745 54,525 44,880 135,150
Bonus to Allany 700 (500) (200) -
Cash Settlement to Allany (36,445) - - (36,445)
Balance of Remaining
- 54,025 44,680 98,705
Partners

64. B

Beginning Inventory 100,000

Shipments from home office 65,000
Purchases 30,000
Less: Cost of Goods sold (200,000 X 75%) (150,000)
Should be Ending inventory 45,000
Less: Cost of inventory salvaged on fire (10,000 X 75%) (7,500)
Cost of inventory destroyed by fire 37,500
 Page 11
65. C

Cost of Goods sold 150,000.00

Less: Cost of goods sold from purchases (70,000.00)
Cost of Goods sold from shipments @ BP 80,000.00

NOTE: Since in the problem it explicitly stated that all inventory destroyed by fire was
from the home office merchandise implied that all merchandise from outside purchases
were sold, thus the cost of good sold from outside suppliers was computed as follows:
Beginning inventory 40,000 + Purchases 30,000 - Ending inventory 0, resulted to 70,000.

66. B
67. D

40% 30% 30%

November Safe Payment Schedule Cheddar, Cap Sour Cream, Cap Nacho Cheese, Cap Total
Balances before payment to Partners:
Capital balance 97,000 76,500 66,500 240,000
Loan 20,000 20,000
Total interest 117,000 76,500 66,500
Restricted interest for possible losses
Unrealized Non-Cash Assets in
100,000 75,000 75,000 250,000
November
Anticipated Liquidation Expense 2,000 1,500 1,500 5,000

40% 30% 30%

Sour Nacho
Liability to Cheddar, Cheddar, Cream, Cheese,
Cash NCA Creditors Loan Cap Cap Cap
Balance before Net income 95,0000 350,000 150,000 20,000 95,000 75,000 65,000
Net Income 16,000 12,000 12,000
Realization and loss 80,000 (100,000) (8,000) (6,000) (6,000)
distribution
Payment of liabilities (110,000) (110,000)
Payment of liquidation (15,000) (6,000) (4,500) (4,500)
expense
Balance before payment to 50,000 250,000 40,000 20,000 97,000 76,500 66,500
partners
Payment to Partners (5,000) (5,000)
Balance After November 45,000 250,000 40,000 15,000 97,000 76,500 66,500
Realization and loss 210,000 (250,000) (16,000) (12,000) (12,000)
distribution
Payment of liabilities (40,000) (40,000)
Payment of Liquidation (10,000) (4,000) (3,000) (3,000)
Expense
Payment to Partners in 205,000 0 0 15,000 77,000 61,500 51,500
December
Balances 15,000 - (10,000)
Absorption of Partner Cheddar (10,000) 10,000
Payment to Partners in November 5,000 - -
 Page 12
68. B

69. A

Shipment Purchases from

Total from HO Suppliers
Beginning Inventory 200,000.00 125,000.00 75,000.00
Shipments from home office 625,000.00 625,000.00
Purchases from outside suppliers 400,000.00 400,000.00
Less: Ending Balance (150,000.00) (110,000.00) (40,000.00)
Cost of Goods Sold 1,075,000.00 640,000.00 435,000.00

70. C

Cost of Goods Sold 1,075,000

Multiplied by 50% gross profit on cost 50%
Gross Profit 537,500
Less: Expense 150,000
Net Income in Branch Books 387,500
Realized Gross Profit From Mark Up
Allowance for Mark-up Unadjusted 150,000
Less: Mark up in Ending Inventory from
shipments (110,000/125% x 25%) 22,000 128,000
Branch True Net Income 515,500

END